Fed Rate Hike Probability & Market Impact Simulator

Macro Scenario Presets

Labor & Inflation Inputs

Nonfarm Payroll Additions +285,000

0k (Recessionary) +175k (Trend) +500k (Overheating)

Average Hourly Wage Growth (YoY) 4.6%

2.0% 3.5% (Fed Target Safe) 6.5%

Unemployment Rate 3.8%

3.2% (Historic Tight) 4.1% (NAIRU) 6.5%

Core PCE Inflation (YoY) 3.4%

2.0% (Fed Target) 3.0% 6.0%

Current Fed Funds Policy Rate 5.25%

Macro Transmission Loop

Step 1

Strong Payrolls & Low Jobless

Step 2

Wage-Push Inflation Spiral

Step 3

Fed Policy Hawkish Repricing

Step 4

Higher Discount Rate & Yields

Step 5

Equity Multiple Compression

When labor market reports exceed consensus, sticky wage gains threaten the 2% price stability mandate. The FOMC responds by lifting terminal rate expectations, driving 2-year yields higher and compressing equity valuation multiples.

FOMC Next Meeting Implied Probabilities Calibrated Reaction Function

Aggressive Hike (+50 bps) 12%

12%

Standard Hike (+25 bps) 56%

56%

Pause / Hold Rate (0 bps) 28%

28%

Policy Rate Cut (-25 bps) 4%

U.S. Treasury Yield Curve Shift Baseline Simulated Shift

Wall Street Equity Sector Valuation Sensitivity DCF & Discount Rate Impact

Asset / Sector	Sensitivity Driver	Valuation Delta	Transmission Rationale